EU considers allowing more state aid to boost green projects

In addition to a green bonus, the European Commission "might refuse to approve aid that would harm the environment, or would keep polluting factories or power plants operating,” said EU competition commissioner Margrethe Vestager. [EPA-EFE/OLIVIER MATTHYS]

European Union governments may be allowed to grant more state aid to projects that help the bloc achieve its climate goals, Europe’s antitrust chief Margrethe Vestager said on Tuesday (22 September), calling such an incentive a “green bonus”.

In contrast, polluting factories or power plants may be rebuffed when they seek state aid, she said.

Vestager’s comments underscore the European Commission’s efforts to cut greenhouse gas emissions by at least 55% by 2030, both to fuel an economic recovery from the COVID-19 pandemic and meet the goals of the Paris climate agreement.

She said one example that might qualify for a green bonus could be state funded building projects that use recycled materials.

“We could think of giving a sort of ‘green bonus’, which allows governments to use more state aid for projects that make a genuine contribution to our green goals,” she told an event organised by European Parliament liberal group Renew Europe.

“We could also look at how to build on the success of competitive tenders in keeping renewable energy costs down, by seeing if we could extend that approach to other areas,” she added.

Conversely, “we might refuse to approve aid that would harm the environment, or would keep polluting factories or power plants operating,” Vestager said in a statement.

The European Commission also plans to kick off a consultation in the coming weeks on how competition rules and sustainability policies work together, culminating in a conference early next year.

“The time has come to launch a European debate on how EU competition policy can best support the Green Deal,” Vestager said, adding however that competition policy “is not going to take the place of environmental laws or green investment”.

As a green policy tool, competition policy works best “when it works hand in hand with regulations that make companies bear the cost of the harm that they do,” Vestager explained. “The question is rather if we can do more, to apply our rules in ways that better support the Green Deal.”

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